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Bigger companies may often ignore the possibilities inherent in the disruption of niche markets, because even winning won't move the needle for them. Retail investors can take advantage of that.

A disruptive company changes the status quo of its industry, and success often follows.

In this clip from Industry Focus: Tech, Motley Fool analysts Dylan Lewis and Simon Erickson talk about how a disruptive company will often be ignored by the big fish like Berkshire Hathaway, and why retail investors need to pay some attention to these overlooked players.

Check out all five of Simon's principles, based on Clayton Christensen's The Innovator's Dilemma:

Dylan Lewis: No. 2: Small markets don't solve growth needs. You want to elaborate on that a little bit?

Simon Erickson: Say that you're Berkshire Hathaway, you're Warren Buffett. Buffett has famously said that he can't go after small fish anymore. He can't go after small-cap companies as investments, because they're just not going to move the needle for Berkshire Hathaway. He has multiple hundreds of billions of dollars in invested capital, so he has to go after the Coca-Cola's and the IBM's as investments. It's the same thing with businesses. If you're wildly successful, doing $100 billion a year, you have to find a market that's existing today that's a $10 billion market for you to grow 10%. A $100 million company just has to have $10 million to do the same thing.

Disruptive companies, a lot of times, will look at markets that big companies are not looking at. The example for this one is a Rule Breakers' recommendation, Ubiquiti Networks (NASDAQ:UBNT), that's setting up wireless access points to get onto the internet. When you think about the internet service providers we've typically had, they lay a lot of cable, they go and want to dominate a market. Maybe if you have an apartment complex in the D.C. area, you're locked into one certain provider.

Lewis: I know that game very well.

Erickson: Huge costs, huge sales forces like to go in and dominate areas. Ubiquiti has no direct sales force and very little marketing costs. They basically have customers come to them and say, "Hey, I would really like this kind of product spec. Can you build it for me and tell us how much we'll pay for it?" It's been really successful in universities and sports stadiums and emerging markets. A very, very profitable business.